Is paying off credit card debt with a personal loan the quickest way to increase FICO score?

[acercode]

I took out a personal loan for $4000 and plan on paying off my entire cc debt. Will this increase my FICO score and by how much? I plan on paying off the loan by this year.

I am trying to improve my FICO so I can get a low rate for an auto loan. It's currently at ~640. 

[SouthJamaica]

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@acercode wrote:

I took out a personal loan for $4000 and plan on paying off my entire cc debt. Will this increase my FICO score and by how much? I plan on paying off the loan by this year.

I am trying to improve my FICO so I can get a low rate for an auto loan. It's currently at ~640. 

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It probably will improve your scores. After you've paid all the credit cards off, be sure to let at least one card report a small balance before you pay it off each month, in order to avoid the "all zero penalty".

[acercode]

All zero penalty is a real thing? Wow, I didn't know that. That's why I ask questions cause I learn something new every day. I guess I'll leave the card with 0% apr alone then. 

[SouthJamaica]

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@acercode wrote:

All zero penalty is a real thing? Wow, I didn't know that. That's why I ask questions cause I learn something new every day. I guess I'll leave the card with 0% apr alone then. 

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Yes but you'll get penalized for high utilization if it reports at 30% or higher utilization.

[donkort]

It's ideal when you have under 3% utilization over all, and under 3% for one card, with the others at zero.  As you pay off the personal loan, that utilization will go down, too, further increasing your score.

[stw715]

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@acercode wrote:

All zero penalty is a real thing? Wow, I didn't know that. That's why I ask questions cause I learn something new every day. I guess I'll leave the card with 0% apr alone then. 

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This is just in case you were thinking other wise...

To show credit/revolving utilizations, you don't need to carry balance over, just use whatever (may it be under 3% like other suggested or 5 dollars) then pay the statement balance in full when due date comes. So you don't ever have to pay interest just to have utilizations shown.

[Thomas_Thumb]

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@acercode wrote:

I took out a personal loan for $4000 and plan on paying off my entire cc debt. Will this increase my FICO score and by how much? I plan on paying off the loan by this year.

I am trying to improve my FICO so I can get a low rate for an auto loan. It's currently at ~640. 

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What are your Fico current scores, utilization levels on each card and aggregate revolving utilization? Do you know what version of Fico would be pulled for the Auto loan?

[AzCreditGuy]

Getting a personal loan will hurt your score in the beginning, as you will get hit with inquires, new loan, new loan amts, etc. But a personal loan counts as a credit product that will help your score. This is what I did 4 years ago and I paid the loan off in 2 years vs 5 years. You just have to make sure you get a personal loan from a major bank and not some of these better alternative lending platforms out there, I was dinged with a CFA loan, when it wasn’t and now because of this old stupid credit system I will be dinged with that CFA for 10 yrs after closing the personal loan. My loan was through SOFI

[edubs54]

Let me ask this question. Why not just work on paying down the 4,000 in credit cards and have a zero balance. No need for a personal loan. I have researched the way FICO works and you are rewarded with a higher score for stayin in Debt ? Does that make any sense ? Take a ook at the FICO percentages on what counts toward the score. You pay say a auto loan off and your dinged about 30 points right away ? Really ?

Paying something off should be good correct ? So why a negative reaction to a positive thing ? Makes no sense. The new Fico 10T scores is a better reperesenative score imo. The basic FICO, 5,4,2 is all a scam imo. Say a score for those are 620, your 10 T is like 680 to 700 ? Different factors that don't ding you as much for paying something off. This is why the FHA is moving to the new FICO 10t score. Its a better picture of your score and promotes good credit habits. Get out of debt and stay there ! AIMO

[CYBERSAM]

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@acercode wrote:

All zero penalty is a real thing? Wow, I didn't know that. That's why I ask questions cause I learn something new every day. I guess I'll leave the card with 0% apr alone then. 

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You are not going to be paying any interest! Just set to pay the statement balance and that should not incur any interest!